Wednesday, September 26, 2012

INDIA: A LAND OF SCAMS

Japan is known as the land of rising sun, Korea is known as the land of morning calm
Finland is called the land of midnight sun,Indonesia is called the land of thousand islands, Turkey is called the sick man of Europe and Africa is called the dark continent


These epithets are earned as a result of unique geographical location or the strength and weakness of a particular nation. While the government of India likes to call India by the epithet ' Incredible India' , to a common unbiased man the right description for the country is India: A land of scams'. Everyday one comes across some new scam of the magnitude of thousands of crores of rupees, not that what has come to light already is the end of list of scams. In fact all these come to light as a result of probing by media with its meagre resources and strangely enough the all powerful government and its agencies, be it at the centre or states, never saw anything wrong the way country's assets are being looted in the name of development of the country and bringing prosperity to its masses by the who's who of powerful polity, executive and their cronies, stooges and near and dear ones.
We are just talking of instances involving losses and involvements of thousands of crores of rupees and if we have the inclination, energy and resources to find out all cases ranging from 50 lakhs to 1000 crore, the extent  to which this  malaise is affecting the country and its masses is simply beyond human imagination. Yet the polity of all hues is least concerned about it and the attacks and defence are kept in the political arena only. No body is interested in seeking a solution as it affects the very existence of the polity and its ability to loot the nation.
We have heard some top guns of Indian political system screaming that they are ashamed of being Indians over  realities of poverty in this country but never have we come across anyone from this polity being ashamed of corruption malaise. At least I was embarrassed when a foreigner named India as The land of scams and could only hang my head in shame. After all I am not a politician.

Monday, September 24, 2012

INDIA ON THE PATH OF GLOBAL LEADERSHIP OR SELF DESTRUCTION

India on the path of global leadership or self destruction ? This is the basic question in the minds of majority of Indians as well as analysts all over this globe. On one hand is the golden opportunity window resulting out of drying up of growth and earning avenues in most of the advanced countries of the world. while on the other India offers a huge insatiable market of consumer goods, services, infrastructure, medical care etc.etc. along with a huge skilled low cost human resource of a demographic mix compelling for all economic and manufacturing activity.
The path of global leadership revolves around the statesmanship of its leaders and the lesser humans in the form of polity will not only fritter away these opportunities but will lead the nation to a mess all around.
Actual scenario:
  • The economy is riddled with high inflation, rupee depreciation, high current account account deficit and high fiscal deficit and at the same time the government is riddled with the problems of lack of conviction and direction, indecision, compulsions of coalition politics and its own compulsions of not resorting to good governance and good economics. 
  • Luckily the prime minister could convince his party that good economics is good politics too. But sadly enough the Indian polity,both of the government and opposition do not seem to be attracted to the maxim that good governance is the ultimate and can catapult the results of good economics to yield ideal good politics.

For the sake of march of India to prosperity, for the sake of poor and under privileged and for putting India on the path of global leadership, a sincere and earnest effort and thrust in the following key areas is required or else India is certainly treading on the path of self destruction.
  • Corruption mitigation the first and foremost growth engine of Indian economy needs special attention from the government firstly through administrative measures and finally reinforcing these through legislative measures otherwise sooner than later India will move on the path of self destruction.This requires
  1. Election reforms on topmost  priority basis as elections are the mother of all corruption in India 
  2. The country witnessed 2G scam, Coalgate, Commonwealth games scam, Adarsh society scam and many others in recent times as a result of  governance which is motivated and guided by corruption and the governance has to get rid of this taint if India has to tread on the path of global leadership.
  • Infrastructure and human resource development could be a game changer in the Indian growth story
  • Resorting to renewable energy sources in a big way for use in  standalone mode and with micro and mini grids to start with covering more than 50% of the households in remote locations, small villages and towns. The expenditure in transmission and distribution, normally referred to as poles and wires expenditure and costing as much as the cost of electricity at the plant is not warranted. Simultaneously large scale power plants utilising in situ, free of cost, clean energy sources  like solar and wind with zero probability of catastrophic accidents should be developed on a war footing for providing energy security to the country.
  • Reinforcing Monetary policy decisions taken by Reserve Bank of India (RBI) to tackle the problems of rupee devaluation, inflation, current account and fiscal deficits with actual increase of goods produced, measures to bring in austerity in government expenditure and cutting down all infructuos expenditure of the State.
  • Rationalisation of subsidy: Subsidies are a requirement in any developing nation but they have to be provided only to poor needy individuals and sectors with a cost effective and efficient distribution system with minimum cost to the exchequer and adopting procedures which do away with the thefts, pilferages and subsidy going into wrong hands. Diesel is a typical case in point. Diesel cars, fuel guzzler SUV's, top end sedans and luxury vehicles in the hands of rich and ultra rich of the land, factories, businesses and corporate sector are enjoying diesel subsidy along with the government itself and account for something like 50% of this burden. Similarly theft and misuse of kerosene and LPG cooking gas accounts for about 50% of the subsidy bill on these items and needs corrective action immediately.
The government has off late started with some decisions towards good economics and reforms in the policy. Further it is likely to come out with social reforms to allure its vote banks with various doles, freebies and subsidies. Unless and until these are carried out in an efficient manner and after devising a methodology to benefit only the real needy and target audience there is going to be a large unnecessary, wasteful drag on the exchequer. It is still not clear whether the reforms will stand the test of time in the parliament or not,for the Indian polity is very very volatile when it comes to taking a stand. In fact principles or policy considerations are the last word and everybody is looking for his pound of flesh in every vote for or against any issue that comes up for consideration. Even the two major national parties are guilty of switching their stand depending on whether they form the government or form the opposition as has been witnessed in the case of (Foreign Direct Investment) FDI in retail.

Thursday, September 20, 2012


Ending India’s Massive Power Grid Outages

 By 3p Guest Author | September 20th, 2012 

 the great indian outage solar energy smart grid Renewable Energy india energy constraints
World’s Biggest Blackout – Image courtesy National Post, Canada
By Darshan Goswami, M.S., P.E.
On July 30th and 31st, the world’s largest blackout – The Great Indian Outage, stretching from New Delhi to Kolkata – occurred.  This blackout caused by northern power grid failure left nearly 700 million people – twice the population of the U.S. – without electricity.  A grid failure of this magnitude has thrown light on the massive demand for power in a country and its struggle to generate a much-needed power supply.
India aims to expand its power-generation capacity by 44 percent over the next five years. In June, the country’s power generation fell short by 5.8 percent against a peak-hour demand for 128 gigawatts, according to government data. India is divided into five regional grids, which are all interconnected, except for the southern grid. All the grids are being run by Power Grid, which operates more than 100,000 kilometers of electricity transmission lines.
Serious concerns have been once again raised about the country’s growing infrastructure and inability to meet its energy needs.  Government officials have concluded, “The grid failed because of the overloading of power,” and contend that “many states” try to take more power than they are allotted from the grid.
The country’s lack of energy security is a major constraint to its capacity to generate power.  The slow pace of tariff reforms is hindering infrastructure investment at the state level in most parts of the country.  The centralized model of power generation, transmission and distribution is growing more and more costly to maintain at current levels to meet increasing energy needs.  The blackout and shortage of power are hampering India’s economic growth and its capacity for growth.
So what can the world’s biggest democracy do to help eliminate such wide-sweeping outages in the future? Government should assess how best to address the power needs to meet the future growth and prevent such massive power failures. India’s power blackout is an opportunity for developing sustainable energy.  India urgently needs to develop and deploy large-scale renewable energy to end its power grid outages. I have addressed these concerns in my presentation, Renewable Energy Solutions For India – A Strategic Development Plan, and in the following published papers:  How Concentrated Solar Power Can Meet India’s Future Power Needs, Solar Farming Potential in India, How To Empower India With Big Solar Energy Plans, and Full version: India’s Solar Sunrise – Renewable Energy Focus.
For economic as well as environmental reasons, India needs to shift to non-polluting renewable sources of energy. Renewable energy is the most attractive investment because it will provide long-term economic growth for India. Decentralized off-grid renewable distributed generation sources like solar, wind, hydro, biomass, biogas, geothermal, hydrogen energy and fuel cells are the answers. These sources have the advantage of empowering people at the grassroots level and utilize distribution and transmission methods with little to no emissions. India should consider developing targets for electrification that include renewable off-grid options and/or renewable powered mini-grids. This will take a substantial electrical load off the existing power grid and also reduce the need for installing additional transmission and distribution systems.

FDI in RETAIL in INDIA: A STEP in RIGHT DIRECTION

The government of India has at last woken to the need of some policy reforms and has started with the FDI in retail and aviation which do not seem to fall in line with the vote bank politics of almost all the opposition parties of the country.Let us be reminded that many of them fought tooth and nail in seventies and eighties of the last century against mechanisation in farm sector, computerisation of the workplace including banks, railways etc. etc. by saying that these steps will increase unemployment. Today also we are no different and most of these parties who only believe in redistribution of already created wealth for bringing in prosperity rather than propelling wealth creation.Recently an article titled FDI in retail: made in united states has tried to project a lop sided picture of FDI in retail and this forms the basis of resistance by the opposition polity of the country who are only looking for some vote catching matter to fool the gullible citizenry of India.
Retail activity in a market covers following areas

 Fruit & vegetable sellers – Sells fruits and vegetables.
 Food stores - Result of bakery products. Also sells dairy and processed food and beverages.
 Non-Vegetable Store - Sells chicken and mutton.
 Kirana I - Sells bakery products, dairy and processed food, home and personal care and beverages.
 Kirana II - Sells categories available at a kirana I store plus cereals, pulses, spices and edible oils.
 Apparel - Sells men’s wear, women’s wear, innerwear, kinds & infant wear.
 Footwear - Sells men’s wear, women’s wear, kid’s wear
 Consumer durables & IT- Sells electronics, durables & IT products.
 Furnishing - Sells home lines & upholstery.
 Hardware - Sells sanitary ware, door fitting, tiles.
 General mechanize - Includes lighting, stationery, toys, gifts & crockery.
As it is the so called organised retail in the country is about 4-5% of the total retail. The interest of the retailer and employee always go against each other.  The footwear, apparel, consumer durables and IT, furnishings,hardware etc are part of the so called Indian organised retail, organised because of the fact that they just have sales tax number and not because they have employees rather than servants whose interests are taken care of through provident fund, medical insurance and other benefits due to an employee. Any good governance should aim at increasing the organised sector, be it a retailer or an employee.Incidentally retail in India is of the order of Rs 23000 billion (2,30,000 crore) and its contribution to the Indian budget  is  negligible but the contribution to black money is significant.These were discussed earlier in FDI in retail in India:why so much of opposition. But the Indian polity with all self professed concern for the poor man is working feverishly not to reduce this unorganised sector.
The talk about desruction of all the  Kirana and mom and pop stores along with 12 million retailers and 40 million employees is grossly over hyped and incorrect simply because its penetration in the Indian economy will be very very small.

  • Villages and towns below 1 lakh have a population of more lest than 900 million and are bound to cover 80% of 12 million retailers and 40 million employees comprising of the following categories and will be totally  unaffected by FDI in retail as big ticket retail stores have not been allowed to operate there.
  • Even in larger cities, where these stores will come in peripheral areas, presently only about 2-3% customers will be in a position to use the services of these mega stores because of limitations of personal transport, capacity and capability to store even a week's requirements.
 Then why go in for FDI in retail:
It offers many advantages, namely

  • A 10% mega store retail which may become a reality in the coming 15 years offers
  1. Rs 23000 crore of business which will abide by all the taxation rules of the government
  2. Bringing about 0.2 million employees into the organised sector with all the accompanying  benefits of giving them better remuneration, working environment and social security.
  3. Better earnings for the farmer and less rates to the consumer.
  • Apart from these direct advantages it offers certain grey area advantages which mean a lot in India's march to progress.


  1. Big boost to back end infrastructure like storage facilities including cold storage thus reducing the losses of farm produce
  2. Improvement in logistics of perishable and other commodities and allied infrastructure.
  3. Lowering of current account deficit directly and through feel good factor thus strengthening rupee. A 10% strengthening of rupee will reduce oil import bill proportionately and lower fiscal deficits thus helping in easing out inflation.
  4. Any capital inputs to the retail sector will upgrade India's  realty sector directly. 
In fact FDI in retail is a step in the direct direction and offers a win win situation in all aspects of economy. For this to happen the wise polity of the country should stop resorting to vote catching rhetoric and act in the interest of nation and common man.



Friday, September 14, 2012

INDIAN GOVERNMENT, A GOVERNMENT SANS GOVERNANCE

Governments of countries are meant for administration, governance and necessary legislations to increase the government revenues so that the same could be employed for the betterment of country's economy, and its masses.The present Indian government has failed miserably on these counts because of policy paralysis, its failure to curb inflation, current account deficit, fiscal deficit and above all mitigation of corruption, graft and black money. In fact the Indian government is a government sans governance. In fact sometimes I wonder whether the small phase of 8-9% GDP growth was just a providential jackpot thrust on the nation because of compulsions of advanced western economies. Any value additions on the part of Indian government through far reaching policies, administrative and governance positives does not appear to be a reality.
Statesmen think of next generation and create opportunities, Leaders Seize opportunities that come their way, while Politicians think of next elections and fritter away these opportunities and dirty politicians simply mess up everything.
In fact the Indian polity and leadership falls in the last category of dirty politicians and they are leaving no stone unturned to make a mess of everything and are hell bent not to use this unique opportunity window that has been thrust on India because of global economic woes.

Governance through courts : The courts have been forced to intervene in normal governance functions for the political process and the government's will was found deficient.The court interventions have grown to such a proportion that it has become a cause of concern as brought out in Disturbing trends in judicial activism but were absolutely necessary in the face of inaction by the government. Some excerpts are highlighted below:

COURT INTERVENTIONS
  • In the interest of preventing pollution, the Supreme Court ordered control over automobile emissions, air and noise and traffic pollution, gave orders for parking charges, wearing of helmets in cities, cleanliness in housing colonies, disposal of garbage, control of traffic in New Delhi, made compulsory the wearing of seat belts, ordered action plans to control and prevent the monkey menace in cities and towns, ordered measures to prevent accidents at unmanned railway level crossings, prevent ragging of college freshmen, for collection and storage in blood banks, and for control of loudspeakers and banning of fire crackers.
  • The Court is made the monitor of the conduct of investigating and prosecution agencies who are perceived to have failed or neglected to investigate and prosecute ministers and officials of government. Cases of this type are the investigation and prosecution of ministers and officials believed to be involved in the Jain Hawala case, the fodder scam involving the former Chief Minister of Bihar, Lalu Prasad Yadav, the Taj Corridor case involving the former Chief Minister of Uttar Pradesh, Mayawati, and the recent prosecution of the Telecom Minister and officials in the 2G Telecom scam case by the Supreme Court.
  • Matters of policy of government are subject to the Court’s scrutiny. Distribution of food-grains to persons below poverty line was monitored, which even made the Prime Minister remind the Court that it was interfering with the complex food distribution policies of government. In the 2G Licenses case, the Court held that all public resources and assets are a matter of public trust and they can only be disposed of in a transparent manner by a public auction to the highest bidder. This has led to the President making a Reference to the Court for the Court’s legal advice under Article 143 of the Constitution. In the same case, the Court set aside the expert opinion of the Telecom Regulatory Authority of India (TRAI) to sell 2G spectrum without auction to create greater teledensity in India.
  • The Court has for all practical purposes disregarded the separation of powers under the Constitution, and assumed a general supervisory function over other branches of governments. The temptation to rush to the Supreme Court and 21 High Courts for any grievance against a public authority has also deflected the primary responsibility of citizens themselves in a representative self government of making legislators and the executive responsible for their actions. The answer often given by the judiciary to this type of overreach is that it is compelled to take upon this task as the other branches of government have failed in their obligations. On this specious justification, the political branches of government may, by the same logic, take over the functions of the judiciary when it has failed, and there can be no doubt that there are many areas where the judiciary has failed to meet the expectations of the public by its inefficiency and areas of cases.
  • Economic Governance Through Reserve Bank ( RBI )
The Indian economy appears to be in a mess. Inflation rates are uncomfortably high. We have rupee valued at a all time low value in international markets. We have high current account deficit along with high fiscal deficit and the GDP growth is moving downwards continuously. Strangely, the government has left the answer to all these problems solely to RBI whose actions are leading to a catch 22 situation because of the interdependence of these problems when tackled through monetary policy actions. These patchwork solutions will only give some breathing period for the government to act with long term measures to have lasting solutions and alone will take the country nowhere and will only delay the impending disaster. The real answer lie in 
  • Inflation control through increasing the availability of goods and not through raising the interest rates which will only reduce the growth rates.Economics, governance and inflation go hand in hand and are the only permanent remedy to inflation and growth rates.
  • Current account deficit and fiscal deficit are dependent on Indian Oil Economics in a very big way and requires immediate attention on the part of government to seek a long term permanent solution in reducing the quantum of oil imports as also the subsidy burden in the light scenario of ever increasing   international prices of crude. The path of raising the prices through reduction in subsidies can give respite in the short term but reducing demand, pilferages, thefts and mismanagement of subsidies has to be accorded topmost priority to find a lasting solution.
But the Indian government has chosen the path of 
  • Disinvestment in Public Sector Units, a decision country is going to regret in the long run
  • Foreign Direct Investment
  • Policy of wait and watch  
  1. hoping international crude prices will cool off thus reducing the oil bill of the nation
  2. western economies will improve and our exports to these countries will grow.
  • And lastly Raising oil prices partially but good economics and good politics will never go hand in hand and ultimately good politics will rule supreme. The answer has to through a combination of good governance with a 60% weightage and good economics and good politics with a 20% weightage.
These actions can provide some relief to the Indian economy in the short run but the long term solutions will emerge through good corruption free governance, increasing efficiency, stopping thefts and pilferages and meaningful austerity measures. Alas, no effort in these directions is forthcoming from the Indian government and sadly it remains a government sans governance.

Tuesday, September 11, 2012

FREE COAL ALLOCATION: A MASTERPIECE MANIPULATION

In a country where all waste and garbage is sold and is the earning method of thousands of people, the decision of government to allocate blocks of coal, the black gold, absolutely free of charge to the cronies, stooges, and near and dear ones of those in power is simply a master stroke in throwing dust in the eyes of Indian citizenry, in the name of welfare of the poor.

  • Myths about coal cost contribution to electricity generation
Let us try to understand the impact of allocations on power generation and heavy industry like steel and cement. Recently it was brought out by NTPC that a 25% decrease ( from $100 to $75 a ton ) in international coal prices will bring down the cost of power generation by mere 7 - 10 paise per unit, a meagre decrease of 2-3% in the power generation cost at the plant for a coal cost reduction of Rs 1100/ton. The fuel component of power generation is merely 35-40 paise per unit even when coal is priced at Rs 4000/ton and the cost to consumer multiplies manifolds because of plant capital cost, manpower costs, transmission and distribution costs etc.. Where is the concern for the common man or providing stimulus to growth seen when in one go the governments increase rates to consumers by more than 30%.
In steel production, coal contributes 8 to 12% to the cost of steel whereas in cement industry the contribution of the coal to the cost of cement is about 18-20% and the coal cost includes royalty, mining, coking ( in case of steel production ) and logistics.
The coal block allocation or auction and the loss to revenue relates only to the royalty money. Incidentally the royalty content in coal price of about Rs1500/ton supplied by Coal India is Rs 180/ton. In the light of all this, arguments for coal block allocations are nothing more than a hoax and seem to be governed by everything other than any noble intention. In fact such decisions are bleeding the Indian economy and are putting India's march to prosperity backwards by a couple of years.
  • In a recent report on huge profits by Jindal Power, Naveen Jindal a congress M.P. and Chairman and MD of Jindal Power says," Huge Profits not because of cheap coal " but are because of efficient planning, implementation and operations.
But still the government insists that coal block allocations free of charge have been done in the interest of the country and its poor masses. Somebody out of this committed polity with lot of hidden agenda should venture to throw some light on the following basic questions:


  • Who is the owner of the land?
  • Even lease in residential and commercial property keep on getting revised upwards but coal allotted and use of thousands of acres will be free for all times to come even if its prices escalate manifolds which is going to be a most likely scenario
  • The change to auction route according to government is a long and tedious affair requiring legislation . These guys managing the affairs of the government in all their wisdom could not think in terms of royalty payments in their eagerness to favour themselves, fianancially, politically or for any other consideration .